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KDDI CORPORATION
Financial Results of the Fiscal Year Ended March 2010
April 23, 2010
Ubiquitous Solution Company
1
The figures included in the following brief, including the business performance target and the target for the number of subscribers are all projected data based on the information currently available to the KDDI Group, and are subject to variable factors such as economic conditions, a competitive environment and the future prospects for newly introduced services.Accordingly, please be advised that the actual results of business performance or of the number of subscribers may differ substantially from the projections described here.
2
1.1.1. Financial Results Highlights for FY2010.31. Financial Results Highlights for FY2010.3Consolidated basis
Operating revenues declined by 1.6% yoy. Operating income rose by 0.1% yoy. Posted ¥61.1B extraordinary loss including business restructuring expenses for streamlining NW and impairment loss etc.
Mobile BusinessOperating revenues declined by 2.5% yoy. Operating income declined by 3.5% yoy.No. of “au” subs at end-March was 31.87M with a cumulative share at 28.4%.Handset sales were 10.20 million units, average sales commission was ¥36,000.
Fixed-line BusinessOperating revenues declined 1.1% yoy. Operating income recovered by ¥12.3B, to ¥44.2B.At end-March, no. of fixed access lines was 5.94M. Within this, no. of FTTH subs rose to 1.51M.Profitability achieved for the fiscal year by CTCNote1, consolidated subsidiary providing FTTH services etc. in Chubu region.
KDDI’s Equity Participation in J:COMAssumed Liberty Global, Inc. (LGI) Group’s stake in J:COM by acquiring LGI Group’s entire stake in three intermediary holding companiesNote2 for ¥361.7B.
Increase year-end dividend per share from ¥5,500, to ¥6,500, giving full-year dividendper share of ¥13,000.
1
2
3
4
5
Note1: Chubu Telecommunications Co., Inc. Note2: Liberty Global Japan Ⅱ, LLC / Liberty Jupiter, LLC / Liberty Japan LLC
3
1.1.2. Full2. Full--year Outlook for FY2011.3 (1)year Outlook for FY2011.3 (1)
On a consolidated basis, both operating revenues and operating income are forecasted tokeep the same level as FY2010.3.- Mobile Business
Decrease due to decrease in voice ARPU caused by customer shift to “Simple course”and increase in cost due to reorganization of 800MHz band.
- Fixed-line BusinessAchieve profitability through reduction of NW cost etc. and improvement of profitabilityof FTTH business etc.
FY2010.3 Result → FY2011.3 Forecast (Change)
Note: All figures are on a consolidated basis except those where business segments are referred.
1
Operating revenues ¥3,442.1B → ¥3,440.0B (▲ ¥2.1B / - 0.1% yoy)¥1.1B yoy)
yoy))
¥53.7B¥54.2B
¥400)0.93M)0.40M)0.54M)0.53M)
Operating income ¥443.9B → ¥445.0B (+ / + 0.3%Mobile Business ¥483.7B → ¥430.0B (▲ / -11.1%Fixed-line Business ▲¥44.2B → ¥10.0B (+ / -
Key performance index- “au” ARPU ¥5,410 → ¥ 5,010 (▲- “au” total subs 31.87M → 32.80M (+- “au” handset no. of unit sold 10.20M → 10.60M (+- Fixed-access lines total subs 5.94M → 6.48M (+- FTTH total subs 1.51M → 2.04M (+
4
1.1.2. Full2. Full--year Outlook for FY2011.3 (year Outlook for FY2011.3 (22))
CAPEX peaked out in FY2009.3. Forecast for FY2011.3 at ¥490.0B, decrease by ¥28.0B yoy.
Main new facts included in the basis of the outlook and the effect amount- Increased number of overseas companies included in the scope of consolidation
Operating revenues: ¥50.0B / Operating income: ¥3.0B
- Equity participation in J:COM (became KDDI Group affiliate)Effect on equity in gain of affiliates: ▲¥3.0BNote1 (same effect on ordinary income)
Breakdown: Amortization of goodwill: ¥11.0B(goodwill equivalent: ¥290.0BNote2 / depreciation 20 years)
Equity in gain of affiliates : ¥8.0BNote3
2
3
Note1: Plan to recognize from 2Q. Note2: Estimate as of Apr. 23, 2010. Note3: Calculation by KDDI based on business results forecasts for the year ending Dec. 31, 2010, which J:COM released
on Jan. 28, 2010.
5
1.1.33. FY2011.3 Challenges. FY2011.3 Challenges1
2
3
4
Amid dramatic change in markets and earnings structures, advance business restructuringfor sustainable growth.
Mobile BusinessAchieve fundamental improvement in profitability as voice ARPU decreases with customer shift to “Simple course”.Promote transfer to tri-band compatible handsets in preparation for reorganization of the 800MHz band.Step up initiatives for new areas (smart phones / data cards etc.) and enhance data ARPU.Strengthen infrastructure for mobile Broadband era.
Fixed-line BusinessAchieve profitability on operating income basis.Expand FTTH customer base even further.
Growing / new areasExpand businesses not dependent on telecommunications traffic (content/media business).Expand overseas businesses through development of data center business globally andentry into emerging countries’ business etc.Strengthen management foundations of WiMAX business / financial business and promotedevelopment of new businesses.Build partnership with J:COM and J:COM’s existing shareholders and realize synergies.
6
2. Consolidated Financial Results2. Consolidated Financial ResultsOperating revenues
(Billions of yen)
0.0
100.0
200.0
300.0
400.0
500.0
FY2009.3 FY2010.3 FY2011.3(E)
yoy +0.1%
Operating income(Billions of yen)
+0.3%
0.0
1,000.0
2,000.0
3,000.0
4,000.0
FY2009.3 FY2010.3 FY2011.3(E)
yoy -1.6% -0.1%
(Billions of yen)
FY2009.3yoy yoy
Operating revenues 3,497.5 3,442.1 -1.6% 3,440.0 -0.1%Operating income 443.2 443.9 0.1% 445.0 0.3% Operating margin 12.7% 12.9% - 12.9% -Ordinary income 440.5 422.9 -4.0% 420.0 -0.7%Net income 222.7 212.8 -4.5% 240.0 12.8%Free Cash Flow -63.2 -184.4 - 230.0 -EBITDA 904.0 927.3 2.6% 910.0 -1.9% EBITDA margin 25.8% 26.9% - 26.5% -
FY2010.3 FY2011.3(E)
7
3. Mobile Business3. Mobile BusinessOperating revenues
0.0
100.0
200.0
300.0
400.0
500.0
600.0
FY2009.3 FY2010.3 FY2011.3(E)
yoy -3.5%
(Billions of yen) Operating income(Billions of yen)
0.0
1,000.0
2,000.0
3,000.0
4,000.0
FY2009.3 FY2010.3 FY2011.3(E)
-11.1%
yoy -2.5% -4.0%
(Billions of yen)
(' 000)Total Subs 30,843 31,872 32,800 of module-type 923 1,085 1,300
WIN(EV-DO) 22,722 26,174 29,9001X 7,805 5,451 -cdmaOne 316 247 -
FY2011.3(E)FY2010.3FY2009.3FY2009.3yoy yoy
Operating revenues 2,719.2 2,650.1 -2.5% 2,545.0 -4.0%Operating income 501.5 483.7 -3.5% 430.0 -11.1% Operating margin 18.4% 18.3% - 16.9% -Ordinary income 509.1 490.6 -3.6% 415.0 -15.4%Net income 273.1 293.2 7.3% 235.0 -19.8%Free Cash Flow 180.0 276.5 53.6% 235.0 -15.0%EBITDA 821.9 826.8 0.6% 765.0 -7.5% EBITDA margin 30.2% 31.2% - 30.1% -
FY2011.3(E)FY2010.3
Note
Note: For FY2011.3 (E), equity-method investment income/loss, that used to be out of segment, is allocated to each segment.
8
(Ref.) Mobile Business Operating income(Ref.) Mobile Business Operating income
300.0
350.0
400.0
450.0
500.0
0FY2009.3 FY2010.3 FY2011.3
501.5483.7
430.0(a)
(b)
(c)
-95.4 -5.7
+60.0
+23.3
(d)
(a)
(b)
+17.0
-114.9
(c)
+62.0
-17.8(d)
-17.7B -53.7B
(E)
(a)Revenues from telecommunication business(b)NW-related expensesNote
(c)Sales commissions (d)Others
Operating income
(Billions of yen)
Cases of increases and decreases(FY2009.3 to FY2011.3 estimate)
Note: Depreciation + noncurrent assets retirement cost + communication facility fee (including access charge for services).
9
4. Fixed4. Fixed--line Businessline Business
-80.0
-60.0
-40.0
-20.0
0.0
20.0
FY2009.3 FY2010.3 FY2011.3(E)0.0
200.0
400.0
600.0
800.0
1,000.0
FY2009.3 FY2010.3 FY2011.3(E)
Subs (' 000)
ADSL 1,224 1,031 840 FTTH 1,099 1,513 2,040 Metal-plus 3,130 2,852 2,570 Cable-plus phone 604 960 1,280 CATV 722 972 1,040
5,342 5,944 6,480
FY2011.3(E)FY2010.3FY2009.3
Fixed access lines
FY2009.3yoy yoy
Operating revenues 848.7 839.2 -1.1% 940.0 12.0%Operating income -56.6 -44.2 - 10.0 - Operating margin -6.7% -5.3% - 1.1% -Ordinary income -61.6 -56.8 - 0.0 -Net income -43.1 -68.4 - 0.0 -Free Cash Flow -40.7 -75.7 - 0.0 -EBITDA 82.3 94.7 15.0% 140.0 47.9% EBITDA margin 9.7% 11.3% - 14.9% -
FY2010.3 FY2011.3(E)
yoy -1.1%
Operating incomeOperating revenues(Billions of yen)(Billions of yen)
*Yoy comparisons are not available as figures are negative.
(Billions of yen)
Note2: CATV subs include number of households with at least one contract via broadcasting, internet, or telephone.Note3: Fixed access lines are FTTH, direct-revenue telephony (Metal-plus, Cable-plus phone) and CATV subs and the number excludes crossover subs.Note4: For FY2011.3 (E), equity-method investment income/loss, that used to be out of segment, is allocated to each segment.
Note1 : Including ADSL one (ADSL used over Metal-plus).
Note1
Note2
Note3
+12.0%
Note4
10
(Ref.)(Ref.) FixedFixed--line Business Operating incomeline Business Operating income
-100.0
-80.0
-60.0
-40.0
-20.0
0.0
-56.6
-44.2
10.0(Billions of yen)
Note: CTC, JCN and overseas subsidiaries
+12.3B +54.2B
(a)
-28.6
(b)
(c)+27.6+9.4
+4.0
(d)
(a)
+18.9
(c)+27.4
+11.7
-3.8(d)
FY2009.3 FY2010.3 FY2011.3(E)
Profitable in FY2011.3
(a)Non-consolidated operating revenues(b)Non-consolidated operating expenses(c)Group company earningsNote (d)Others
Operating income
(b)
Inclusive of ¥19.5B effectfrom network cost etc.
reduction
Cases of increases and decreases(FY2009.3 to FY2011.3 estimate)
11
5. Capital Expenditures5. Capital Expenditures
55.0
98.1
127.0
42.5
83.6
0.0
50.0
100.0
150.0
200.0
FY2009.3 FY2010.3 FY2011.3(E)
106.6 74.2
119.2
360.0
3.31.42.9 0.1
200.1204.3
96.8
0.0
100.0
200.0
300.0
400.0
500.0
FY2009.3 FY2010.3 FY2011.3(E)
Fixed-line capexMobile capex
(Billions of yen)
New 800MHz2GHz800MHz EV-DO800MHz 1X
Common Equip.
OthersFTTH
(Billions of yen)
(Billions of yen)
yoy yoyCapex (Cash basis) Consolidated 575.1 518.0 -9.9% 490.0 -5.4%
Mobile 432.1 376.8 -12.8% 360.0 -4.5%Fixed-line 140.6 138.7 -1.4% 127.0 -8.4%
FY2010.3 FY2011.3(E)FY2009.3
Note: Excludes ¥207.1B cost for buy-back of 4 buildings in FY2009.3.
12
6. Free Cash Flows6. Free Cash FlowsCreate stable operating cash flows of approx. ¥600.0B every fiscal year.Expect free cash flows of ¥230.0B for FY2011.3.
-12.5 -63.2-184.4
230.0296.5139.6
-1,000.0
-800.0
-600.0
-400.0
-200.0
0.0
200.0
400.0
600.0
800.0
1,000.0
FY2006.3 FY2007.3 FY2008.3 FY2009.3 FY2010.3 FY2011.3
- 1, 000
- 800
- 600
- 400
- 200
0
200
400
600
800
1, 000
Cash Flow Benchmarks
(E)
4 Buildings buy-back related etc. Equity participation in J:COM etc.
Effect of period-end holiday
Capex
CF fromoperating activities
Other CF(investment etc.)
FCF
EBITDA
(equity participationetc.)
(Billions of yen)
13
7. Shareholder Returns7. Shareholder ReturnsIncreased dividend ¥2,000 for FY2010.3 (increased for 8 consecutive periods).
Policy of steadily increase consolidated payout ratio to 25%–30% range while considering investment for sustainable growth remains.
895895
8951,200
1,200
2,4002,400
1,000
3,500
3,500
4,500
4,500
5,000
5,000
5,500
5,500
5,500
5,500
1,000
6,500
6,500
6,500
FY2002.3 FY2003.3 FY2004.3 FY2005.3 FY2006.3 FY2007.3 FY2008.3 FY2009.3 FY2010.3 FY2011.3
Year-end DividendCommemorative DividendInterim Dividend
(yen)
( - )(17.5%)
(16.8%)
(21.2%)(20.8%)
(22.0%)
Dividend per Share
(22.4%)
1,790 2,0953,600
6,9008,000
11,0009,500
(21.5%)10,500
(E)
(27.2%)
13,000
Note: ( ) refers to payout ratio, which shows on non-consolidated basis until FY2006.3 and on a consolidated basis from FY2007.3. FY2002.3 posted net loss.
(24.1%)
13,000
(E)
14
Segment Discussions & StrategiesSegment Discussions & Strategies
Mobile BusinessMobile Business
Fixed-line BusinessFixed-line Business
Growth / new areasGrowth / new areas
15
1.1.1. Net Additions1. Net Additions
Full-year / FY2010.3Full-year / FY2009.3
(Share) (Share)
Full-year / FY2009.3 Full-year / FY2010.3
Total Sub Basis Mobile Internet Sub Basis
504k subs / 10.6% 1,030k subs / 21.9% 678k subs / 27.1% 784k subs / 38.2%
Net additions of subs in FY2010.3 was 1,030k with a share of 21.9%. Net additions of mobile Internet subs in FY2010.3 was 784k with a share of 38.2%.
MobileBusiness
FY2009.3 FY2010.3 FY2009.3 FY2010.3
-40%
-20%
0%
20%
40%
60%
80%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
KDDINTT DOCOMOSOFTBANK MOBILEEMOBILE
-40%
-20%
0%
20%
40%
60%
80%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
KDDINTT DOCOMOSOFTBANK MOBILEEMOBILE
Source: Telecommunications Carriers Association website
16
1.2. Churn Rate1.2. Churn Rate MobileBusiness
0.87%0.77%
0.65%
0.85%
0.67%0.72%0.64%
0.75%
0.0%
0.5%
1.0%
1.5%
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
<0.72%><0.76%>
FY2009.3
Full-year
Churn rate in FY2010.3 was 0.72%, down 0.04 points yoy.
FY2010.3 FY2011.3(E)
<0.69%>
Down 0.04 points yoy
Note: Churn rate is calculated for ordinary handsets which exclude module-type terminals.
17
1.3. Sales Commissions1.3. Sales Commissions MobileBusiness
Average sales commissions for FY2010.3 was ¥36,000, down ¥3,000 yoy.
010,00020,00030,00040,00050,000
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
FY2009.3 FY2010.3
Average Commissions per Unit ** New purchases & upgrade models
(yen)
FY2009.3 FY2010.3 FY2011.31Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q (E)
129.0 104.0 79.0 114.0 90.0 112.0 71.0 93.0
45,000 38,000 32,000 41,000 41,000 44,000 30,000 30,000
2,860 2,700 2,450 2,800 2,210 2,560 2,330 3,100
36,000
10,200
365.0Total sales commissions
29,000
Number of units sold
Average commissions / unit
10,810 10,600
303.0425.0
39,000(Billions of yen)
(yen)
(‘000 units)
18
1.4. 1.4. AARPURPU MobileBusiness
ARPU in FY2010.3 was ¥5,410, down 6.7% yoy.
2,190 2,210 2,220 2,220 2,250 2,270 2,260 2,270 2,320
3,710 3,730 3,650 3,280 2,6902,7303,3303,350 3,210
148150142138135140139136
020406080
100120140160
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q0
2,000
4,000
6,000
8,000
FY2009.3
FY2011.3(E)
Total
Voice
Data
MOU
5,010
5,900 5,940 5,870 5,500
FY2010.3
5,600
Total ARPU
5,600 5,470
yoyTotal ▲ ¥390 (▲ 6.7%)
of Voice ▲ ¥440 (▲12.3%)
of Data + ¥50 (+ 2.3%)
5,000
Full-year FY2009.3 FY2010.3 FY2011.3(E)
¥5,410¥3,150¥2,260
¥5,010¥2,690¥2,320
Total ARPUof Voiceof Data
¥5,800¥3,590¥2,210
Note: The portion of FY2009.3 4Q and FY2010.3 4Q are decreases due to the settlement of access charges among carriers.
(mins.) (yen)
19
1.1.55.. ““ SSimple Course imple Course ”” MobileBusiness
12.52M subscriptions at end-March, making cumulative take-up ratio 41%Note.
Among customers who selected “Simple course,” installment payment rate was 42% in FY2010.3.
58%
7%4%
31%
Payment MethodNo. of Subs and Take-up Ratio
(24 times)
(18 times)
(12 times)
(FY2010.3)
0
5
10
15
20
25
30
3/'09 6/'09 9/'09 12/'09 3/'10 3/'11
(Million subs)
Note: Module-type and pre-paid contract are out of scope of take-up ratio calculation.
(E)
take-up raaio:41%
take-up ratio: 68%Lump sumpayment
Lump sumpayment
Installmentpayment
Installmentpayment
20
2.2. ReorganizationReorganization of 800MHz Bandof 800MHz Band MobileBusiness
20.67 million tri-band (new 800MHz / current 800MHz / 2GHz) compatible handsetsas of end-March.Promote transfer to tri-band compatible handsets in preparation for reorganizationof the 800MHz band in Jul. 2012.
0
10
20
30
3/'09 3/'10 3/'11
Tri-band Compatible Handset Contract Measure to Promote Transfer
Attracting to stores by sending DM.Waiving charges for handset upgradeprocessing.Providing handsets at affordable prices etc. (Use mid-range / low-end handsets)
Target non-tri-band-compatible handsets users by…
(E)
(Million subs)
52%
67%
86%
Effect on FY2011.3
Expected cost: approx. ¥80.0B
Note: %s show tri-band compatible handset contract ratio. Module-type contract is out of scope of calculation.
21
3. Smart Phones3. Smart Phones MobileBusiness
New Android MarketTM
E-mail(@ezweb.ne.jp)
Based on open platform handsets, use operator packs to customize functions standardin Japan and seek “ease of use” while aiming to reduce handset procurement cost.Plan to introduce models likely to be used as primary handset from second release onward.
UI suited to Japanese mobile usersCustomize standard AndroidTM UI for Japan
Card-type menu, control functions for applications running etc.
Functions standard in JapanNote1
Infraredcommunication
Decoration mail
“1-seg”
Also compatible with au services
Planned, from late Sept.“au one Navi Walk”
Roll out in Japanese apps. market
Note1: Not applicable to IS02 (release scheduled in late Jun.) Note: “Android” and “Android market” are registered trademarks of Google Inc.
22
4. Applications Market4. Applications Market MobileBusiness
Android MarketTM
Note1: as of end-Mar. 2010
For smart phones incorporating AndroidTM, in addition to Android MarketTM, construct easy-to-understand applications market suited to Japan and encourage data usage.
Secure
Danger-ous Low (Compatibility in Japan) High
Japanese compatible(approx. 3%)
Total: approx. 30,000
applicationsNote1
Recommendedapps.
Generalapps.
Expand recommended functionsAgency function for collecting charges
(au simple settlement)Security check functions
(Create confidence through recommended applications)
Advance adaptation of applications to Japanese language
Note2: Planned release from late Aug. 2010.
Based on proactive search by userPrompt model: users download after accepting security risks disclosed
(Security level)
23
5. Promote Increased Data Usage (1)5. Promote Increased Data Usage (1) MobileBusiness
Promote spread of EZ News EX as content suited to targeting customers in their 40s and above.For customers that use data infrequently, use au shops to encourage data usage.
0%
10%
20%
30%
40%
50%EZ News EX "au one" top page
EZ News EX Readers by Age Group
Members surpass 500k,Members surpass 500k,eight months after service beginseight months after service begins
Targeting customers in their 40s and
above
10s 20s 30s 40s 50s-
Expand EZ News EX Services
“Ultra-fast Bulletin Mail” and“Professional BaseballBulletins” started from March
Further expand content to increase
percentage of readers
Promotion at au Shops
Showcase content at au shop outlets.Consider using digital signage etc. to showcase / sell content.
24
5. Promote Increased Data Usage (2)5. Promote Increased Data Usage (2) MobileBusiness
0
100
200
300
400
500
600
1 月 2 月
StandardSimple
Business EZ
For Adult
Instead of standard efforts to attract customers to the general portal site “au one,”establish new entrances suited to different lifestyles, and encourage content usage among mid-level-usage customers and enhance data ARPU.
Expansion of Portal for Each Segment
Change in data ARPU before/after “au one for adults”
usage (50s and above)
Up more than ¥350
Before usageThree-month average
After usageThree-month average
(1) Target period: Oct. 2009 – Dec. 2009(2) Target customers: Individual users receiving
services at Feb. 28, 2010(3) Calculation of average value in three months
before and after month in which customer first accessed “au one for adults” over three times.
(Statistical parameters)
25
6. Strengthening Infrastructure6. Strengthening Infrastructure MobileBusiness
DataTrans-missionMarket
MobilePhoneMarket
CDMA OFDMA3G/3.5G 3.9G
Wi-Fi
CDMA2000 1x
2009 2010 2011 2012~
WiMAX (OFDMA : TDD)
EV-DO Rev. 0/Rev. A Multi-carrier Rev. A
LTE(OFDMA : FDD)
~2008
Wi-FiPurpose
-
Realize max. of 9.3Mbps (downstream) by converting current Rev.A system to multicarrier, strengthen competitiveness.Exploit Wi-Fi and Femtocell, promote development of data usage indoors and improvement of connection quality.
FY2011.3 measures
Exploit to expand data services
FemtocellExpand au areaDevelop into major access point offuture mobile BB era
Increase Wi-Fi compatible handsets
Plan to begin providing this summer
26
((RerRer.) Competitiveness in the Mobile Broadband Era MobileBusiness.) Competitiveness in the Mobile Broadband Era
Wi-Fi / Femtocell etc.
BBroadcast FFixed MMobile
USB Dongle
Data card
Data traffic peak: Centers on late night home usage
Fixed broadband system has significant importance as the backhaul for the mobile communication as well as for FTTH service.For femtocell, which is at center of attention, needs fixed broadband system.
Fixed AccessFTTHADSL
Broadcasting & Internet
CATV 3G MobileEV-DO Rev.A
Multi-carrier Rev. A
New Gen. RANsMobile WiMAX
LTEBB Access
IP Backbone
KDDI Powered Ethernet
The Internet Cloud
27
1. Fixed Access Lines1. Fixed Access Lines Fixed-lineBusiness
At end-March, number of fixed access lines was 5.94M.FTTH subs in FY2010.3 was 414k, up 71% yoy.
722 882 896 913 972 1,040604 697 778 871 960 1,280
3,130 3,065 3,000 2,927 2,852 2,570
1,099 1,211 1,319 1,426 1,5132,040
0
2,000
4,000
6,000
8,000
3/'09 6/'09 9/'09 12/'09 3/'10 3/'11
FTTHMetal-plusCable-plus phoneCATV
(E)
(5,342)(5,587) (5,700) (5,813) (5,944)
34 28 3548
80 8261
8226
2223
26
23
262830
2
0
20
40
60
80
100
120
1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q
OCTCTCKDDI
5951
58
74
FY2009.3
112
FY2010.3
108 107
86
(6,480)
414242
Note2
Fixed Access Lines Note1 FTTH Net Additions(‘000 subs) (‘000 subs)
Note2: Okinawa Cellular Telephone Company. Subs of OkinawaTelecommunication Network Co., Inc. included.
Note1: ( ) shows total subs of access lines excluding crossover subs.
28
2.2. FTTHFTTH Fixed-lineBusiness
Introduction of “Giga Value Plan”FY2009.3
FY2010.3
FY2011.3
Expansion of detached houses areaFor low-rise condominiums introduction of 1Gbps serviceOCT launched FTTH service
Enhancement of products
Expansion of Service area
Customerbase
expansion
As of end-Mar. 2010.
For detached houses:For condominiums: nationwide
(970GC*)
Existing service area
* In Okinawa, using NW of Okinawa Telecommunication Network Co., Inc.
In FY2011.3, work to further expand FTTH customer base, aim for full-year net increase of 0.53M and 2.04M cumulative subs at end-March 2011.
“au HIKARI”
“Commuf@-hikari”
“Hikarifuru” “au HIKARI Chura”
29
1. Content/Media Business1. Content/Media Business Growth/new areas
Sales of Content/Media Business
0.0
20.0
40.0
60.0
80.0
100.0
FY2005.3 FY2006.3 FY2007.3 FY2008.3 FY2009.3 FY2010.3 FY2011.3
Collaborative content & othersE-commerceAdvertisingContent-fee collection
(E)
Note: The accounting method for advertising sales changed in FY2008.3 and FY2009.3.
11.317.5
27.235.9
44.7
58.6
72.1
(Billions of yen)
FY2010.3 content/media revenues increased 31% yoy, to ¥58.6B. Focus on developing various business models not dependent on telecommunications traffic and expand business fields of entire Group.
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2. Overseas Business2. Overseas Business Growth/new areas
Expand existing ICT businesses, develop WiMAX businesses and DC businesses in developing countries’ growth markets. Enter the mobile phone businesses targeting immigrants in U.S., expand business domain overseas.
Expanding Existing ICT Businesses
Streng-thening
SI
Streng-thening
SI
・Between Japan and U.S.: Unity
・Asia: SJC
Expand-ingNW
Expand-ingNW
Increas-ingDC
Increas-ingDC
・U.K.: London (Docklands West)・Singapore・Vietnam: Hanoi・South Africa: Cape Town, Johannesburg
Entry into mobile Entry into mobile phone businesses phone businesses targeting immigrants targeting immigrants in U.S. (MVNO)in U.S. (MVNO)
Entry into fixed Entry into fixed WiMAX business WiMAX business in Bangladeshin Bangladesh
Entry into growth markets
Development of ICT businesses in developing countries
Services for immigrants from developing countries
Developed nations BRICs etc. Developing countries
・Strengthening in Asia
Making DMX con-solidated subsidiary
OverseasBases
25 countries55 cities83 locations
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3. 3. WiMAXWiMAX Growth/new areas
0
10
20
9/'09 12/'09 3/'10 3/'110
100
200
300
400
500
600
No. of base stations(left axes)
(’000 stations) (‘000 subs)Base stations and subs
Subs(rightaxes)
(E)
1,000
UQ Communications Inc., an affiliate of KDDI, develop mobile WiMAX services aiming to realize true mobile broadband society.
AreaCoverage
Base stations at Mar. 31: 7,013→Covering all 47 pref. capitals and
major cities nationwideDevelopment of repeaters→Strengthening indoor connectivity
Handsets
WiMAX-embedded PCs: 9 manufacturers, 31 models
→Embedded-as-standard models increasingMobile Wi-Fi gateway:
4 manufacturers, 4 models
MVNO
Concluded wholesale contracts: 39 companies→Number of electronics retail stores carrying
MVNO increasing
Subs.Subs. at Mar. 31: 150,300→Accompanying area expansion,
currently accelerating
Current situation
Expand areacoverage
Realize interna-tional roaming
Spread WiMAX PCs
Expand sales channels
FY2011.3 initiatives
31
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44. . Financial BusinessFinancial Business Growth/new areas
Expand services of affiliate Jibun Bank Corporation and increase no. of accounts.
To develop a mobile-based new-concept general insurance business, Aioi Insurance Co., Ltd., and KDDI jointly invested to establish a preparatory company (Feb. 2010).
754853
179
343
495641
0
200
400
600
800
1,000
9/'08 3/'09 9/'09 3/'10
(‘000 accounts)
“Jibun Bank”Expand
financial products for individuals
Compatibilitywith various
Internet settlements
Surpassed900k
accounts
Fastest approach to 1 millionaccounts among Internet banks
(less than 2 years since operations began)
Entry into General Insurance Business
Establishment of preparatory company
(Company name) Mobile General Insurance Planning Co., Ltd.
(Capital) ¥300M (KDDI stake: 33.4%)
Concept
Combine mobile content and nonlife insurance etc., provide optimal insurance suited to au mobile phones and services used(example)
× sports insurance
EC / auction × shopping insurance
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5.5. Alliance with J:COM (1)Alliance with J:COM (1) Growth/new areas
Started the talk about business alliance between KDDI and J:COM going forward.Build partnership with J:COM and J:COM’s existing shareholders and realize synergies.
2nd largest telecomoperator in Japan
Establish strategic partnership
Holds JCN, the 2nd largestMSONote in Japan, as aconsolidated subsidiary
Largest MSONote in Japan
Value ofAlliance
By converging KDDI’s telecommunications business (mobile/fixed-line) resource and J:COM’s CATV business resource,offer attractive FMBC service and enhance customer satisfaction,as well as enhance both companies’ enterprise value by the synergies given.
Note: Multiple System Operator
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5.5. Alliance with J:COM (2)Alliance with J:COM (2) Growth/new areas
Telecom Business/Product
Collaboration WG
Business collaboration among fixed-line telephone, mobile/wireless communication and ISP.Sales channel collaboration.
Establish Alliance Study Committee where concrete plans for collaboration between KDDI and J:COM are studied. By setting up working groups (WG) for every category of issues, aim to speed up the study for the collaboration plans.
Alliance Study Committee and Possible Themes to be Studied
Media BusinessWG
Utilization of J:COM content business by KDDI.Collaboration in mobile/multimedia broadcasting.
CATV BusinessWG
Joint marketing and sales collaboration by J:COMand JCN.
Technology/Infrastructure WG
Development of equipment or products utilizing technology development resource of KDDI, such asnext generation set-top box (STB) for CATV etc.Effective investment by both companies, networkconsolidation, for example.
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